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Sarbanes-Oxley Case Clears Up Issues of Pleading Knowledge of Protected Whistleblowing

The recent decision in the Pennsylvania case of Westawski v. Merck & Co, Inc. clarified a rule stating whenever someone files a whistleblower complaint about a Sarbanes-Oxley violation against a corporation and he or she “alleges facts that [he or she] engaged in protected activity” directly to oversight committees, supervisors or the corporation, then that person fulfills “the scienter” element in regard to withstanding a motion to dismiss.

The plaintiff in the case was Joni Westawski, who worked for Merck & Co. starting in 2001. By 2009, she had been promoted to a management-track job as a market research analyst at the company’s corporate headquarters. That year, her supervisor had her head up a brand-new study, but she started to worry that the study violated federal law and internal company policies.

Westawski’s allegations included the following:

  • Merck was not following its contracting practices
  • The number of subjects in the study was too small to justify the amount of money the company was spending, and there was an expensive cost per interview
  • The study was five months behind schedule
  • Merck was making some inappropriate payments to a contractor outside of the company

Westawski claims she brought these concerns to her supervisor, her supervisor’s supervisor, other people in the compliance and human resources department, two vice presidents at the company and the company’s ombudsman. Eventually, Merck reorganized the department and told her that the company had decided to eliminate her position. But when Westawski got a new organizational chart via email, she discovered her position had not actually been eliminated. Instead, the company had simply opted to replace her.

Merck filed a motion to dismiss, claiming Westawski failed to allege individual supervisors were part of the wrongdoing. The court disagreed, citing the number of people to whom Westawski brought her complaints as strong evidence of her argument.

For more information on what this case could mean for you as a whistleblower, speak with Steve Kardell at Whistleblower Law for Managers.

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